Smith v. Kansas Orthopaedic Center, P.A.
316 P.3d 790
Kan. Ct. App.2013Background
- Smith was hired in 2007 as a physical therapist; her application and personnel manual unambiguously stated she was an at-will employee and that policies (including compensation) could be changed prospectively.
- Offer letter from the practice stated: “Annual Salary: $70,000 with a bonus guarantee of $10,000.” The letter did not specify duration of the guarantee.
- Employer revised its bonus plan in April 2008 to a quarterly formula (15% of receipts over $45,000); Smith knew of the change and continued working.
- Smith’s paid bonuses: $12,522 (2008), then below $10,000 in 2009–2011; she sued in 2012 seeking the shortfall for 2009–2011 ($20,136).
- District court granted summary judgment for the employer; Smith appealed. The court reviewed de novo and affirmed, holding an at-will employee who continues after a prospectively announced change accepts the new terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether employer promised a continuing $10,000 annual bonus | Smith: offer created a guarantee/unilateral contract of $10,000 each year of employment | KOC: letter did not obligate continuing bonus; at-will status allows prospective changes | Held: No enforceable continuing guarantee; at-will employer may change compensation prospectively |
| Whether employer’s 2008 bonus-plan change was effective against Smith | Smith: initial guarantee prevented retroactive/ongoing change | KOC: change applied prospectively; Smith was notified and continued employment | Held: Change applied prospectively; Smith’s continued employment constituted acceptance |
| Whether factual disputes (oral limitation on guarantee) precluded summary judgment | Smith: manager orally limited guarantee to first year was false; affidavit disputes deposition | KOC: manager’s deposition supports limitation; affidavit offered to contradict deposition inadmissible | Held: Court properly excluded late affidavit and found no material factual dispute preventing summary judgment |
| Whether unilateral-contract or other exception to at-will applies | Smith: unilateral contract formed by employer’s promise upon performance | KOC: even if unilateral, at-will status permits prospective modifications | Held: Unilateral-contract framing does not prevent prospective modification; continuing employment with knowledge accepts new terms |
Key Cases Cited
- Hansford v. Silver Lake Heights, 294 Kan. 707 (legal standard for appellate review of summary judgment)
- O’Brien v. Leegin Creative Leather Products, Inc., 294 Kan. 318 (summary judgment standard)
- Campbell v. Husky Hogs, 292 Kan. 225 (general rule: at-will employment can be terminated at any time)
- Salon Enterprises, Inc. v. Langford, 29 Kan. App. 2d 268 (employer may change commission/compensation for at-will employees prospectively)
- Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983) (continued employment with knowledge of changed terms may constitute acceptance)
- Albrant v. Sterling Furniture Co., 85 Or. App. 272 (employee impliedly accepts prospective modifications by continuing employment)